Transcript Slide 1

The Role of Petrobras
in Energy Integration and Renewable
Fuels in South America
José Sergio Gabrielli de Azevedo
President and CEO
September 25, 2006
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Disclosure
The presentation may contain forecasts about future events. Such forecasts merely
reflect the expectations of the Company's management. Such terms as "anticipate",
"believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along
with similar or analogous expressions, are used to identify such forecasts. These
predictions evidently involve risks and uncertainties, whether foreseen or not by the
Company. Therefore, the future results of operations may differ from current
expectations, and readers must not base their expectations exclusively on the
information presented herein. The Company is not obliged to update the
presentation/such forecasts in light of new information or future developments.
Cautionary Statement for US investors
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves that a
company has demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. We use certain terms in this presentation, such as oil and gas resources,
that the SEC’s guidelines strictly prohibit us from including in filings with the SEC.
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Concentration of reserves in sensitive areas
cause for increasing concern
• In the medium to long term light oil supplies likely to come from Middle East, Africa (OPEC)
and Russia
•More than 62% of the world reserves on the hands of 5 Middle East Countries
742.7
(reserves billion boe)
40.2
Asia
103.5
114.3
South and
Central America
Africa
140.5
59.5
North
America
3Fonte: BP Statistical Review of World Energy
Europe &
Eurasia
Middle
East
3
Latin American proven oil reserves have
increased in relative importance and average life
1984
1994
2004
R/P* = 41.84
8.5%
R/P* = 41.78
R/P* = 26.77
8.0%
4,8%
3.5%
3.8%
5,0%
13,4%
7,6%
5.1%
8.8%
56,5%
9.4%
6.4%
12,7%
65.1%
7.9%
Total
762 billion boe
Middle East
North America
Total
1.017 billion boe
11.7%
61.8%
Total
1.188 billion boe
Europe & Eurasia
Pacific Asia
Africa
Latin America
• In 20 years, Latin America’s proven reserves increased from 36.6 billion barrels (1984) to 101
billion barrels (2004).
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Source:
BP Statistical Review of World Energy
4
* Reserves/Production Latin America (years)
World Total Primary Energy Supply has shown
increased use of gas, coal and nuclear sources
1973
2004
Increase
5,069 Mtoe
6,154 Mtoe
11,223 Mtoe
10.85%
2%
1%
2,59%
13.04%
2%
11%
11%
24%
26.19%
6%
25%
16%
22.12%
21%
35.2%
46.0%
25.21%
Coal
Gas
Hydro
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Source: IEA Energy Statistics
Crude Oil
Nuclear
Renewables and Others
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Compared to OECD, LA uses more hydro, oil and
renewables and less nuclear and coal (2003)
Latin America
OECD
World
464 Mtoe
5,395 Mtoe
10,579 Mtoe
2%
2%
4%
5%
19%
11%
11%
21%
25%
6%
10%
45.5%
1%
20%
22%
21%
40%
35%
Coal
Crude Oil
Gas
Nuclear
Hydro
Renewables and Others
In comparison to the whole world LA uses much less coal and more crude oil as a
result of China.
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Source: IEA Energy Statistics
6
Transportation (liquids) in energy consumption is
likely to increase with growing income
Latin America
OECD
364 Mtoe
3,754 Mtoe
3%
4%
30%
28%
39%
30%
Industry Sector
Other Sectors
Source: IEA Energy Statistics
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33%
33%
Transportation Sector
Non-Energy Use
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Coal has dominated Electric Energy Generation
growth in the world
Coal
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Crude Oil
Natural Gas
Nuclear
Hydro
Renewables
Geothermal/Solar/Eolic
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While in LA hydro power has predominated
followed by natural gas
Carvão
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Petróleo
Gás Natural
Nuclear
Hídrica
Renováveis
Geotérmica/Solar/Eólica
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PETROBRAS in position to promote energy
integration in South America
Explore synergies between existing companies in Brazil,
Argentina, Bolivia and Colombia
Increase exploration and production efforts in Peru,
Ecuador and Venezuela
Intensify commercial operations in Paraguay, Uruguay
and Chile
Invest in tecnology logistics and production of renewable
fuels
Participate in development of integrated gas pipeline
network
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Corporate Strategy already points to integration
and renewable fuels
Corporate Strategy
Growth
Profitability
Social and Environmental
Responsibility
Lead the Latin
American
oil,denatural
gas,
oilnatural
products
and biofuels
market,
working as an
Liderar
o mercado
petróleo,
gás
e derivados
na América
Latina,
integrated energy
company,
with selective
expansion
in petrochemical,
atuando
como empresa
integrada
de energia,
com expansão renewable
seletiva energy and
international
activities.
da petroquímica
e da atividade
internacional.
Consolidate and
increase
competitive
advantages in the
Brazilian and
South American
oil and oil
products market
Develop and lead
the domestic
natural gas market
and perform in an
integrated manner
in the gas and
power market in
South America
Selectively
expand
international
activities in an
integrated
manner with the
Company’s
business
Selectively
expand interest
in the
petrochemicals
market
Expand participation
in biofuels market,
lead the domestic
biodiesel production
and increase
participation in the
ethanol business
Operational, management, technological and human resources excellence
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PETROBRASalready among largest publicly traded
Petrobras
companies
Proven reserves (SEC - billion boe) – Dec. 2005
ExxonMobil
22,4
20,1
18,5
17,6
Lukoil*
Petrochina*
BP
Yukos*
Chevron Texaco
Petrobras
Shell
Total
ConocoPhillips
ENI
Statoil
Sinopec*
Repsol
13,0
12,1
11,8
11,5
11,1
9,4
6,8
4,3
3,8
3,3
Oil and gas production (million boe) - 2005
BP
Shell
Petrochina*
Chevron Texaco
7th
Total
Petrobras
ConocoPhillips
Yukos*
Lukoil*
ENI
Statoil
Repsol
Sinopec
32,7
20,8
Yukos*
19,6
Petrochina*
ExxonMobil
15,1
Petrobras
14,6
14,2
ConocoPhillips
13,1
Chevron Texaco
Sinopec
12,3
Total
12,2
12,2
BP
ENI
Statoil
Shell
Repsol
5th
11,5
10,1
9,0
8,0
Source: Evaluate Energy and Company Reports
945
919
908
809
660
624
614
593
427
416
309
7th
Refining capacity (thousand bpd) - 2005
Reserve life (years) – Dec. 2005
Lukoil*
1.484
1.448
1.267
ExxonMobil
XOM
RDS
Sinopec
BP
TOT
COP
PetroChina
CVX
Petrobras
Yukos
Repsol
Lukoil
ENI**
Statoil
6.343
4.026
2.998
2.747
2.708
2.275
2.202
2.195
2.114
1.223
1.175
1.139
524
296
9th
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Investment Plan reflects integrated global
expansion
Business Plan 2007-2011
US$ 87.1 billion
14%
56%
49.3
49,3
31.0
23,0
1.8
1,8
2.33,3
3.3 7,5
3% 2,2
7.5
1.0
3% 1.0
4%
9%
E&P
Petrochemical
23.0
US$ 75.0 bi
26%
12.4
Downstream G&E
Distribution Corporate
86%
Brazil
International
Note: Includes International
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Capex to be financed with its own cash flow
Sources
Uses
(US$ 99.3 billion)
(US$ 99.3 billion)
12.6
12.2
86.7 (*)
87.1
2004-2010
2004-2010
Financing
Debt Amortization
Cash Flow
Capex
• Accrued Economic Profit (2006-2015): US$ 83.4 billion (US$ 53.9 until 2011).
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Oil and gas production based on development of
existing reserves
• Strong investments in production will optimize the development of Petrobras’ proven
reserves, aiming light oil production and a minimum reserve/production ratio of 15 years.
• Petrobras had a 55% success ratio for our exploration wells during 2005, with 38 wells
classified as discovery or producing wells.
Undeveloped Reserves / Total Reserves* (2005)
60,0%
54,3%
53,1%
51,5%
50,5%
50,0%
43,8%
40,5%
39,7%
40,0%
34,3%
30,0%
29,7%
30,0%
25,0%
20,3%
20,0%
12,9%
10,0%
Si
no
pe
c
na
Pe
tr o
Ch
i
Re
ps
ol
-Y
PF
llip
s
Co
no
co
Ph
i
Ch
ev
ro
n
Lu
ko
il
ob
il
BP
St
at
oi
l
O
O
C
CN
Ex
xo
nM
*15
Source: Evaluate Energy
To
ta
l
Sh
el
l
Pe
tr o
br
as
0,0%
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Production targets assure brazilian consumption
and among most ambitious in the industry
7.5% p.a.
Thousand boed
4,556
278
7.8% p.a.
3,493
742
185
2,036
2,020
2,217
96
85
94
161
168
250
265
2,403
101
724
383
551
133
163
289
274
2, 812
2, 374
1, 540
2003
16
1, 493
2004
1, 684
2005
1, 880
T a r ge t 2 0 0 6
Target 2011
2015
For e c a s t
Oi l a nd N GL - B r a z i l
N a t ur a l Ga s - B r a z i l
Oi l a nd N GL - I nt e r na c i ona l
N a t ur a l Ga s - I nt e r na c i ona l
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Fast growing domestic natural gas market for
electicity and other uses
Natural gas market
140
120
Million m3/day
100
Variation 2004 x 2005
Others
Industry
Thermoplants
150%
8,30%
-26,04%
17.7% p.a.
up to 30.0
38,6
60
20
36.9
5,4
22,9
0
9,6
40
121.0
up to 20.0
34
80
2004
17
121.0
45.4
13,5
up to 71.0
48,4
24,8
7,1
Consumed in
2005
Maximum
Potential Supply
Demand 2011(*)
2011
Thermoplants
Industry
Other
National Production
Bolivian Imports
LNG
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* Considers maximal dispatch for every thermoelectric power plant
Brazilian market open for investments in
downstream
New Refinery in Pernambuco
• Investment: US$ 2,5 billion
• Throughput capacity: 200 thousand heavy oil
barrels (50% Petrobras oil / 50% PDVSA oil)
• Focusing
diesel
and
LPG
production
maximization, the new refinery will aim the growth
of oil products demand in the Northeast.
• The Northeast Region, which responds for 19% of oil products demand and holds
only one refinery in Bahia, will no longer be a fuel importer (either from refineries in
Brazil or abroad).
• Costs reduction: oil products transportation are more expensive than for crude oil.
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and petrochemicals
Main Projects
Rio de Janeiro Petrochemical
Complex
Advantages:
• Proximity to Petrobras’ installations in
Rio de Janeiro;
• Availability of labor for both the
Acrylic Complex /SAP
construction and operational phase;
PTA Pernambuco
• Proximity to port installations.
Nitrogenated Fertilizers Unit III
Fafen BA
• Investments of US$ 3.3 billion in
• Products: Diesel, LPG, Ethylene,
Propylene, PX, Benzene and Coke.
•The Complex will add value to 150,000
barrels/day of heavy oil form the Campos
Basin.
Petrochemicals or more with Rio de
Janeiro petrochemical plant
• Reducing the Brazilian deficit and
adding value to Downstream
production.
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Petrochemical
Complex –
Itaboraí
São Gonçalo
Liquids
Outflow Unit
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Southern cone and Venezuela to receive US$3.3
billion Capex and US$3.9 billion still to be allocated
South Cone: US$ 2.8 Million
Argentina
84%
Americas, Africa e Eurasia: US$ 5.4 Million
Others
8%
Venezuela
9%
United
States
50%
Nigeria/
Guine
33%
Others
4%
Ecuador
4%
Peru
8%
New Businesses: US$ 3.9 Million
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Producing, refining and distributing
in the South Cone
Bolívia
Production: San Alberto e San Antonio; and
Colpa-Caranda (*)
Proved Reserves: 553 MMBOe (SPE, 2005)
2005 Average Production: 54,100 boed
Yacuiba – Rio Grande Gas pipe (431 km, 32”, 17
MM m3/dia transportation capacity)
2 Refineries, with 60,000 bpd of total capacity
20 service stations with Petrobras brand
Argentina (*)
Proved Reserves: 336 MMBOe (SPE, 2005)
Paraguay
132 service stations
2005 Average Production: 104,000 boed
Refining and Distribution: 62,900 bbld in Ricardo D.
Eliçabe – Bahía Blanca, Refisan - San Lorenzo; and
Refinor (28.5 % interest:) refineries
648 service stations
LUBRAS lubricant plant
Dock Sud and Puerto Galvan Terminals
Petrochemical
Power generation
Energy Transmission and Distribution
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Oil and Gas Transportation
Uruguay
89 service stations
 Natural Gas Distribution:
share control and operation of
Conecta and Gaseba
(Montevidéu)
(*) Petrobras Energía
21
Exploring and producing in Ecuador and Peru
Ecuador (*)
 1 Production Block
 1 Exploration Block
 Proved Reserves: 81.2 MMBOe(SPE 2005)
 Production: 9.1 thous. boed – 2005
Peru (*)
 1 Production Block
 5 Exploration Blocks
 Proved Reserves: 109.2 MMBOe(SPE 2005)
 Production: 14.3 thous. boed – 2005
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(*) Petrobras Energía
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Producing and exploring in Colombia and
Venezuela, and distributing in Columbia
Venezuela
 4 Production Blocks (*)
 2 Explorations Blocks (*)
 Proved Reserves: 269 MMBOe(SPE 2005) (*)
 Production 47.6 thous. boed – 2005 (*)
Moruy II exploratory block, operated by
Petrobras in the Venezuelan Golf
Colômbia
 6 Production Blocks. Includes Guando field, the
largest discovery in the country in the last 15 years.
11 Exploration Blocks. Includes Tayrona Block
(22,500 km2) in deep waters of the Caribbean Sea
Proved Reserves 36.3 MMBOe (SPE 2005)
 Production 16.6 thous. boed – 2005
 39 service stations
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(*) Petrobras Energía
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PETROBRAScommitment to reduce carbon intensity
Company
of operations and products
Oil
Natural Gas
Renewables
Availability of 855,000 m3/year of biodiesel
Processing 425,000 m3/year of vegetable oil (H-BIO)
3.5 million m3 ethanol exports
240 MW installed capacity of power generation from renewable sources
Total avoided GHG emissions of 3.93 (M Tons of CO2 Equivalent)
Investments of US$ 0.7 billion in renewable energy and biofuels
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Ethanol from sugar cane much more efficient
than from other crops
Raw Material
Energy Output / Energy
Input(boe)
Wheat
1.2
Corn
1.3 – 1.8
Sugar Beet
1.9
Sugar Cane
8.3
(under Brazilian production conditions)
25
Raw Material
Production / ha
(kg)
Quantity of
Ethanol / ha
Energy Output
/ Energy Input
(boe)
Sugar Cane
85,000
7,080 liter
8.3
Corn
10,000
4,000 liter
1.3 – 1.8
25
Ethanol-gasoline
flex-fuel vehicles are already
PETROBRAS
a reality
•
•
•
•
Consumer wants to decide the fuel at the gas station
Fuel price is one the most important factor
Consumer is aware of pollution and renewable fuels
Today cars manufacturer is producing 80% of FFV in Brazil
LIGHT VEHICLES TOTAL SALES
units
150,000
Ethanol
Gasoline
140,000
FFV
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
Mar-06
Feb-06
Jan-06
Dec-05
Oct-05
Nov-05
Sep-05
Aug-05
Jul-05
Jun-05
May-05
Apr-05
Mar-05
Feb-05
Jan-05
Dec-04
Nov-04
Oct-04
Sep-04
Aug-04
Jul-04
Jun-04
May-04
Apr-04
Mar-04
Feb-04
Jan-04
Dec-03
Oct-03
Nov-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
10,000
0
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Ethanol may become a global market
• Ethanol global market is 46.5 Billion Liters (2005)
• Ethanol as a Fuel is 30.6 Billion Liters (67% of total ethanol production)
• Today the ethanol consumption is 2.6% of gasoline MKT
• 10% of ethanol in gasoline will represent 118 Billion Lt
Brazil-Japan Ethanol Inc.
• Recently, Petrobras incorporated Brazil-Japan Ethanol Inc.
• The company will import and distribute Brazilian-produced
ethanol in Japan;
• Development of technical and commercial solutions for the
reliable and long term supply of alcohol in the Japanese
market;
• Petrobras will break into one of the most complex and
important energy markets in the World:
• ethanol logistics distribution
• fuel distribution sector in Japan.
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But as all renewables need investments in
logistics
New Ethanol Pipeline
(800 km)
New Water Way
for Ethanol
Ethanol Export
8.0 Million m3 in 2012
Marine Terminal
Rio de Janeiro
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Marine Terminal
São Paulo 28
PETROBRAS
Bio
diesel and H-bio will reduce dependency
on imported diesel
• H-Bio: refining process that utilizes vegetable oils as an input, in order to obtain diesel oil;
• Hydrogenation of a blend of diesel and vegetable oils;
Hydrogen
Agribusiness
Processed
Oil
Seeds
Farming
Diesel
Fractions
Crushing
Refinery
Diesel
or
or
Transesterification
Ethanol
Biodiesel
Distributors
or
or
B2 or B5
mixture
Methanol
Glycerin
+
Others
Diesel
Stations
Complementary and not competitive processes
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PETROBRAS
Muchas Gracias
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